No rubber stamp for Janet Yellen appointment to Fed

Updated
October 10, 2013 15:16:00

President Barak Obama's candidate to replace Ben Bernanke as chairman of the US Federal Reserve is unlikely to get an immediate rubber stamp from the powerful US Senate. Senate Republicans are already raising questions about Janet Yellen's views on the Fed's massive stimulus program, and whether it's really helping the US economy. Dr Yellen's nomination was brought forward by the White House in a bid to soothe financial market nerves as the debt ceiling deadline approaches.

SCOTT BEVAN: Well, as the shutdown and the prospect of the US defaulting make global markets edgy, president Obama is hoping his nomination of Janet Yellen as the next chair of the US Federal Reserve will help quell nerves.

The president has urged to US senate to confirm Dr Yellen's appointment without delay while also praising the current Fed chief, Ben Bernanke who's retiring early next year.

With more, here's our business editor Peter Ryan.

PETER RYAN: It was a showbiz style welcome for Janet Yellen - broadcast as breaking news on cable TV around the world.

NEWS REPORTER: The Fed nomination is here. In minutes president Obama will pick Janet Yellen to become the first female head of the Federal Reserve.

PETER RYAN: Dr Yellen is well known in central banking circles as Ben Bernanke's low profile deputy - working behind the scenes during the depths of the global financial crisis.

This morning as she emerged from Dr Bernanke's shadow, president Obama said she checked all the boxes to become the next Federal Reserve chief.

BARACK OBAMA: She is a proven leader and she's tough, not just because she's from Brooklyn. Janet is exceptionally well qualified for this role.

She doesn't have a crystal ball but what she does have is a keen understanding about how markets and the economy work, and she calls it like she sees it.

PETER RYAN: Financial markets are hoping Dr Yellen "sees it" just like Ben Bernanke and will leave interest rates close to zero and be cautious about when to start winding back the Fed's massive economic stimulus program - currently running at $85 billion every month.

Any timeline could be a sticking point in Senate confirmation hearings, but this morning Dr Yellen signalled she was more than up to the job.

JANET YELLEN: The past six years have been tumultuous for the economy and challenging for many Americans. Well, I think we all agree, Mr president that more needs to be done to strengthen the recovery, particularly for those hardest hit by the great recession.

We have made progress, the economy is stronger and the financial system sounder.

PETER RYAN: President Obama urged the US Senate to confirm Dr Yellen's appointment without delay - and didn't hesitate to use the historical nature of the confirmation which is set to become a key part of his legacy.

BARACK OBAMA: I should add that she'll be the first woman to lead the Fed in its 100 year history and I know a lot of Americans, men and women, thank you for not only your example and your excellence but also being a role model for a lot of folks out there.

PETER RYAN: Investors seemed more relaxed after the Janet Yellen news, with Wall Street closing stronger for the first time in three days.

But already the knives are out - with this advice from the billionaire and one time presidential candidate Steve Forbes.

STEVE FORBES: The most important thing she could do is to make it clear she's not Ben Bernanke and that she's going to take a hard look at what's happened in the last four years, is this stuff working? But this is a political world where you get promoted when you fail, sadly.

PETER RYAN: With less than four months left in the job, Ben Bernanke stood beside president Obama this morning for this tribute.

BARACK OBAMA: Perhaps it's no surprise as the son of a pharmacist and a school teacher that Ben Bernanke is the epitome of calm. At the same time when faced with potential global economic meltdown, he has displayed tremendous courage and creativity.

PETER RYAN: That sort of creativity seems to run with Federal Reserve chiefs and it seems that's what's known as the dismal science thrives in a family where wife, husband and son are all at the top of their game.

BARACK OBAMA: You can imagine the conversation around the dinner table might be a little different than ours. (Laughter) In fact I've been told their idea of a great family vacation is the beach with a suitcase full of economics books.

PETER RYAN: The lustre of the Yellen nomination saw the Australian share market bounce this time yesterday when the news first emerged. But today, the All-Ordinaries Index was down a third of 1 per cent as the focus returned to the deadlock over the debt ceiling deadline.